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Trade indicator signals sustained momentum in second quarter

Main components recorded strong gains, signaling above-trend growth.

The World Trade Organization’s latest World Trade Outlook Indicator (WTOI) suggests that global trade will continue to expand moderately in the second quarter of 2017. The latest reading of 102.2 is the highest since May 2011, but strength in the overall index is tempered by weakness in certain component indices.

The WTOI is a leading indicator of world trade that's designed to provide real-time information on the trajectory of merchandise trade ahead of trade volume statistics. Combining a variety of trade-related measures, the WTOI provides an early signal of the current direction of world trade and where it is likely to go in the near future. A reading of 100 indicates trade growth in line with medium-term trends, while readings greater than or less than 100 suggest above-trend or below-trend growth, respectively.

The main components of the WTOI, including export orders, container shipping and air freight, recorded strong gains in recent months, signaling above-trend growth in merchandise trade volumes for the second quarter. However, the upward trend is balanced by weak demand for automotive products, electronics and agricultural raw materials.

The latest reading is up slightly from the previous value of 102.0, which suggests that trade volume growth will be above trend in the first and second quarters of 2017 once data for those periods are available. These results are broadly in line with the WTO trade forecast issued April 12, which foresees a return to moderate trade growth this year after sluggish expansion last year.

World Trade Organization

The WTOI is not intended as a short-term forecast, although it does provide a signal of trade growth in the near future. Its main contribution is to identify turning points and gauge momentum in global trade growth. It complements existing tools, such as WTO’s longer-term trade forecasts, and other statistical releases.

TAGS: Business
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